Clear The Air News Tobacco Blog Rotating Header Image

Tobacco Company

How to measure the black market for cigarettes

Popular methods include surveys, statistical analysis and rooting through rubbish

http://www.economist.com/blogs/economist-explains/2017/06/economist-explains-4

LAST month Britain joined a growing number of countries in which cigarettes can only be sold in plain packs. Tobacco companies claim that the move will boost the sales of contraband cigarettes by making them trickier to spot. There is one way to tell whether this actually happens: track how black-market sales change. But how can such sales be measured?

There are about a dozen ways to do it, of which three are the most commonly used, says Hana Ross of the University of Cape Town. The first is a comparison of the number of cigarettes sold legally (from records on cigarette taxes paid) with the number of cigarettes consumed (which is calculated from surveys asking people how much they smoke). The gap between the two figures is the estimated share of the black market. The second commonly used method is to ask smokers where they have bought cigarettes and how much they have paid; smokers might also be asked to show the most recent pack they have bought. A price lower than that of legally sold brands suggests a contraband sale; some smokers openly admit that they have bought contraband cigarettes, or show a telltale pack.

The third method is to look at discarded cigarette packs and count up each that looks like a black-market purchase, for instance by missing its tax sticker or displaying a brand that is not officially registered. Discarded packs can be collected from vendors who sell cigarettes by the stick, from litter in the streets, or by rummaging through rubbish bins or the hauls of refuse-collection trucks. (“We dress them as if they are going into space”, says Ms Ross about the recruits who rummage through the heaps.)

Each of these methods has its weakness. Smokers may, for example, be reluctant to mention purchases of cigarettes they know to be contraband. They may also claim to smoke less than they actually do (especially if researchers come round soon after a major anti-smoking campaign). Ideally, multiple methods should be applied to get a better estimate of the total black-market sales. And trends over time are best measured by applying the same method. Such studies are conducted in a growing number of countries. Just because a sale occurs in the shadows does not mean it is impossible to cast a smouldering light on it.

Sunday Interview: Dr Mackay, tobacco industry’s worst nightmare

ANTI-TOBACCO advocate Professor Dr Judith Longstaff Mackay has been identified as ‘one of the three most dangerous people in the world’ by the industry. She was instrumental in developing the World Health Organisation’s Framework Convention on Tobacco Control. In her recent visit to Malaysia, she shares her experience campaigning against tobacco in Asia since 1984.

“I HAVE been described as a ‘psychotic human garbage, a gibbering Satan, an insane psychotic, power-lusting piece of meat, Hitler and a nanny’ and they (the tobacco industry allies) threatened to destroy me. But such threats and offensive words never once diverted me from my cause,” says Professor Dr Judith Longstaff Mackay.

Dr Mackay, 73, wears many hats. The World Health Organisation (WHO) senior policy adviser is also senior adviser to Vital Strategies, part of the Bloomberg Initiative to Reduce Tobacco and director of the Asian Consultancy on Tobacco Control.

Her recent visit was part of her capacity as a visiting professor at the University Malaya Centre of Addiction Sciences.

A recipient of British Medical Journal Lifetime Achievement Award (2009) and a Special Award for Outstanding Contribution on Tobacco Control (2014), she has published 200 papers, and addressed over 460 conferences on tobacco control.

Dr Mackay has received many international awards in recognition of her contribution on tobacco control. She was selected as one of Time’s 60 Asian Heroes (2006) and of Time’s 100 World’s Most Influential People (2007).

Question: Born in Britain, you moved to Hong Kong in 1967 after earning a medical degree from the University of Edinburgh in 1966. What led to your resignation as a physician in 1984, and then becoming a leading campaigner and advocate for tobacco control for the last 30 years?

Answer: I had a complete career change from cure to prevention and there were three main reasons for making the shift.

First, when I was working in a hospital in Hong Kong, we had a maxim on our male medical wards that every person we admitted was a smoker with tobacco illnesses, like heart diseases, cancer and chronic chest problems, which were often too late and too advanced to be cured.

I realised we had to go a step “higher upstream” to prevent this rather than merely providing the ambulance services at the end-stage.

I came to feel that hospital medicine was important but it works like a band-aid in comparison with prevention.

You may be able to save hundreds of lives in a lifetime in hospital medicine, but millions of lives could be saved if you work in prevention. It is a completely different ball game, and yet the money, prestige and attention all go to curative medicine; and that is similar around the world.

Second, was the realisation that although women’s health those days was defined very gynaecologically, more women were being killed by tobacco than by every method of contraception combined. I was particularly concerned that the tobacco industry was enticing women with promises of beauty, fame, emancipation and freedom.

The third reason was that the tobacco industry felt Asia was theirs for the taking.

They said it themselves — when asked about their future in the 1980s, “What do we want? We want Asia”.

Q: Why did the tobacco industry had their eyes set on Asia?

A: They wanted the huge populations and the large number of men already smoking who could be persuaded to smoke their brands of cigarettes.

They galloped into Asia with the dream of converting the 60 per cent of men who smoked local cigarettes to switch to international brands, and the second dream of persuading Asian women to start smoking. If this happened, their markets would be enormous.

It would not matter if every smoker in Britain stopped smoking tomorrow if they could capture the massive Asian markets.

Also, Asia was becoming more affluent, so, it was easier for people to afford cigarettes.

Thirdly, when I wrote an article in the South China Morning Post on banning cigarette advertising, a tobacco giant came down on me and labelled me as “entirely unrepresentative and unaccountable”.

The tobacco industry claimed that they were the best source of information on tobacco and they even said it has not been proven that “illness was actually caused by smoking”.

I was so outraged that it was just one of those tipping points in life in 1984. Everything came together and I realised that I really had to work on prevention rather than cure.

Ever since, I have been working principally with governments on the policy level to try and get the tax and the laws in place in tobacco control.

Q: You are known as one of the three most dangerous people in the world by the tobacco industry. What do you have to say about this?

A: Well yes, I’m proud of that. The reason that I got that title was essentially location. I happen to be in Asia and the tobacco companies wanted Asia. They saw this region as their future, but I set about thwarting their goals.

I went early on to countries like China, Indonesia, Malaysia, Mongolia, Vietnam and Cambodia and more recently to North Korea upon learning that British American Tobacco had gone into the country to get laws in place.

Q: In campaigning against tobacco use, what are some of the challenges you have faced?

A: I have had many problems, and was subjected to verbal abuse and even had death threats from allies of the tobacco industry.

Twice, I was threatened by the tobacco industry publicly, saying they would take me to court.

Nothing came of it, so it was either an attempt to intimidate me or to cast doubt on my credibility in the minds of the public.

In a television interview in South Africa, I openly said “I’m not a suicidal type, and if I were to be found knocked down by a bus, you need to find out if the tobacco industry is behind it before you look anywhere else.” And the industry was apparently furious with me for saying that.

However, their tactic now is not so much to attack people individually, but to threaten governments.

They threaten them under Constitutional Law on the rights of their products to advertise, and on freedom of speech and they attack them under trade treaties.

This is intimidating to governments and it can cost anything up to US$50 million (RM214 million) to fight these threats.

Q: You were one of the key persons in formulating the Framework Convention on Tobacco Control (FCTC), the first international treaty on public health. Malaysia is currently drafting the Control of Tobacco and Smoking Bill after lobbying for it since 2004 and they have sought your expertise. What do you have to say about this?

A: If you look at Malaysia and Hong Kong, many of the things that these two jurisdictions have done in the last 30 years are similar, yet Hong Kong has managed to half its male smoking rate.

Hong Kong is down to 10 per cent smokers now, whereas prevalence rates in Malaysia have not really decreased (at around 22.8 per cent). I understand it is not something that can be done overnight.

But the fact that the prevalence has not decreased is either because the excise tax imposed on cigarettes is not high enough, or that the laws that have been passed are not being enforced. In the case of the tobacco bill, the tobacco industry has been an unseen hand behind the scenes.

Q: The Health Ministry plans to increase prices of cigarettes from RM17 to RM21.50 in the near future to deter people from smoking. Several industry players were quick to say that increasing the tax would only lead to increased sales of illicit cigarettes. Is this true? What is the link between the increase in excise tax and contraband cigarettes?

A: There is zero truth in this. This sounds to me suspiciously just like what the tobacco industry would say. Economists, tax, finance and customs officials know, or they should know, that putting up a tobacco tax is not related to any increase in smuggling.

Our Customs chief in Hong Kong, for example, had said quite categorically there is no relationship between the amount of tax that is put in place and smuggling, and that is the position of the WHO too. But the tobacco industry keeps repeating it so often that some governments have come to believe it.

This is one of their tactics. A United States-based non-governmental organisation (NGO) has been going around the world, saying “don’t put up the tax, otherwise, there will be a rise in illicit cigarettes”. What many governments do not realise is that it is funded by the tobacco industry.

Q: WHO proposes that the tax imposed on cigarettes should be at least 75 per cent of the retail price. How efficient would this be in reducing smoking prevalence particularly among Malaysia’s young as compared with other measures, such as school education programmes?

A: Ten experts from around the world were present at a conference held in Hong Kong and, each speaker was asked “If you have one thing to do in tobacco control, what would that be?” and every single one said “tax”. This is because higher prices make cigarettes unaffordable to young people.

Taxation is the most effective approach to controlling the spread of tobacco. Creating smoke-free areas is the second measure, followed by things like advertising bans and smoking cessation.

Some people say health education in schools is crucial. Certainly, everybody likes health education, but it has not been proven effective in bringing down the prevalence of youth smoking.

And you can tell it is not effective because the tobacco industry does not oppose it. They oppose tax increases, plain packaging and smoke-free areas. And because the tobacco industry fights them, we know these are the measures that work.

Q: What needs to be done to improve our health education programmes at schools?

A: School health promotion programmes do not work because traditionally they say that if you smoke, you will get cancer when you are 60 years or heart attack when you are 70 years. If you are only a 11-year-old child, it is totally meaningless.

We need to do much more to revitalise and revamp health promotion and health education. Smoking and non-smoking youth have, in fact, the same level of health knowledge about the harms of smoking. The difference between the two groups is whether they think smoking is cool or a dirty expensive habit.

We have got to make it attractive to be a non-smoker in the teenage years.

Q: The Control of Tobacco and Smoking Bill currently being drafted would see the minimum age for buying cigarettes raised to 21 years old, ban on displaying tobacco products and making it illegal to smoke in vehicles with children inside, among others. How effective would this be in tackling smoking prevalence?

A: (People aged) 8 to 23 years is a vulnerable period. If you can stop children from smoking at this age, they are less likely to smoke. Whereas before that, they do not have the kind of mature judgment to analyse what it will mean to actually smoke.

The tobacco industry is very interested in youth and young adults because one has to only smoke 100 cigarettes and he or she will become lifelong smokers. It is so addictive.

Q: Besides health effects, what are the other impacts of cigarette smoking to the country and its people?

A: Two out of every three smokers die from cigarette smoking, so, you are losing skilled workers. One in every three fires in the world is caused by careless smoking.

There is also loss of productivity. Smokers go out for seven minutes to smoke. So, that’s seven minutes every time they smoke. Smokers are sicker and die on average a decade before non-smokers, so families lose their bread-winner.

There are medical and health costs. There is smoke damage to buildings and fabric.

And then there is a massive cost of cleaning up all the litter, billions of cigarette ends, packets, matches and lighters that are discarded every day in the world.

The tobacco industry claims that tobacco control would harm workers and farmers. This is not true. We have got so many projects now, including right in the heart of tobacco-growing in China showing that if farmers grow alternative crops they actually earn more.

The second fallacy is that if restaurants go smoke-free, they would lose revenue. Nowhere in the world has that happened. The revenue, including in Hong Kong and California, where they have introduced smoke-free policies, has gone up and not down.

Another fallacy is the government would lose money if it puts up the tax.

This does not happen. Some smokers will still pay more for cigarettes, so the revenue goes up. The number of smokers will come down particularly among the young and the poor.

There are so many economic fallacies that some non-governmental organisations propagate. Sometimes, governments almost innocently believe these economic arguments.

Q: If the situation is so dire, why can’t countries impose a blanket ban on cigarettes?

A: No country has put a blanket ban on cigarettes. Authorities have learnt from the prohibition of alcohol in the United States (1920-1933), for example, that it leads to much bigger implications particularly with crime and corruption cases.

So, the idea is to slowly push tobacco use back, so that the reduction is genuine and it is done throughout the community. This is what every government is really trying to do rather than actually ban it.

Q: Malaysia aims to be smoke-free (the End Game of Tobacco) by 2045. Are we moving in the right direction?

A: I strongly commend Malaysia for the foresight in establishing the 2045 goal and targets; few countries have yet to do this.

Recently the prevalence of male smokers has begun to decrease.

It is going to require a major commitment by the government and a huge effort by academia as well as non-governmental organisations in achieving this goal.

The Health Ministry has worked out a year-by-year plan of reducing prevalence up to 2045. It has developed a roadmap and has filled in what needs to be done each year to achieve the goal.

But it is not a quick process: if a country reduces its prevalence by one per cent a year, it is doing quite well.

So, it’s possible for Malaysia, but it will be challenging.

Big tobacco’s big profits

Why are tobacco companies’ profits still booming – despite government regulation and declining smoking rates?

http://www.aljazeera.com/programmes/countingthecost/2017/06/big-tobacco-big-profits-170603092904305.html

Smoking kills. So if you’re in an industry where your product is known to be damaging the health of people who buy it, then you should, in theory, go out of business.

But shares in companies listed in the Bloomberg tobacco producers index have risen 351 percent since 2009, making it one of the best investments of the past decade.

Graphic warning labels and taxes seem to have some effect on reducing the number of smokers but less so on industry profits which keep rising. And investors can’t quit buying the stocks because operating profits continue to go up.

Although some pension funds and life insurers have turned their back on the sector, it’s still not enough to hit big tobacco where it hurts.

Different tax regimes around the world mostly account for the difference in price of cigarettes. But governments are not as hooked as the consumers who buy cigarettes.

Consumers cough up for higher prices because they crave the drug in tobacco – nicotine. Without nicotine addiction, there would be no tobacco industry.

The tobacco industry knows this and has diversified to develop other nicotine products like E-cigarettes. The electronic cigarette market has grown from just $50m in 2005 to an estimated $7.5bn last year, according to Euromonitor. It’s all part of the unique economy of addiction.

New evidence suggests the dangers of cigarettes in the United States have increased despite the fall of smoking rates in recent years. A new study has found that so-called “light” cigarettes may be behind a spike in lung cancer cases, as Heidi Zhou-Castro reports.

Jeremias Paul from the World Health Organization joins Counting the Cost from Geneva to discuss the unique dynamics of the nicotine economy.

Paul thinks the tobacco industry should pay more taxes because they’re making a profit out of people’s addiction.

“If they cause death, they should be taxed to death. In the latest global adult tobacco survey, there was a reduction in tobacco use of about 20 percent, which essentially proves increasing taxes regenerates a lot of revenues but at the same time reduces consumption.”

Philip Morris ‘tobacco sticks’ court prosecution postponed

The heat has come on tobacco company Philip Morris for importing and selling “tobacco sticks”.

http://www.stuff.co.nz/business/industries/93268568/Philip-Morris-tobacco-sticks-court-prosecution-postponed

The company is facing two charges brought by the Ministry of Health over the sticks, called Heets.

The charges were to be called in the Wellington District Court on Friday but at the last minute they were adjourned by agreement until September 7.

That date was for a case review hearing, an indication that the company would plead not guilty although it appeared no pleas were entered.

The ministry said it considered Heets fell into a category of tobacco products for oral use, other than smoking, and so were banned under the Smoke-Free Environments Act.

Heets were described as tobacco sticks heated in an electronic device, rather than being burned like a normal cigarette.

Through a code-protected invitation-only website, the company was marketing its IQOS smokeless electronic devices, which heated the sticks to release the nicotine.

In March the company said it was confident the way it was doing business was legal.

General manager for Philip Morris New Zealand, Jason Erickson, said they complied with all sections of the Smoke-Free Environments Act.

“We are currently making our IQOS device and Heets available to registered adult smokers on a website. If requested, we will provide a demonstration on how to use the IQOS device, which as the Ministry of Health has acknowledged, is a consumer electronics product.”

The two charges the company faced had a maximum $10,000 penalty.

BAT to expand ‘glo’ smokeless tobacco sales in Japan from July

British American Tobacco (BAT) will expand sales of its “glo” tobacco-heating device to Tokyo and Osaka from July and roll it out nationwide by year-end, intensifying a battle with Philip Morris International for a share of Japan’s vaping market.

http://www.thestar.com.my/business/business-news/2017/05/30/bat-to-expand-glo-smokeless-tobacco-sales-in-japan-from-july/

Big tobacco firms are investing in alternative products as more people give up traditional cigarettes amid health concerns.

Japan has emerged as a popular testing ground, mainly for “heat not burn” tobacco devices, given e-cigarettes using nicotine-laced liquid are not permitted under the country’s regulations.

In fact, both glo and Philip Morris’ vaping device “iQOS” were launched in Japan and have limited sales outside.

Glo has been on sale in the northeastern city of Sendai since December and iQOS was rolled out across the country in April 2016. According to their manufacturers, the products have been so popular in Japan that supply has fallen short.

BAT, known for Kent and Lucky Strike cigarettes, will start selling glo in the western Japanese city of Osaka, Miyagi in the country’s northeast and Tokyo from July 3, its Japan president Roberta Palazzetti said.

“Our ambition is to be a leader in next generation-products in Japan,” Palazzetti said at a news conference on Tuesday.

Glo, like iQOS, uses tobacco packed in replaceable sticks.

Instead of burning, the battery-powered devices heat the sticks to generate vapour, which their makers say emit less harmful chemicals than conventional cigarettes.

Marlboro-maker Philip Morris estimates that HeatSticks, used in iQOS, had already cornered a 10% share of the Japanese market as of April, up from 7.6% in January.

Apart from Japan, iQOS is available in at least 19 other markets. Glo went on sale in Switzerland and Canada earlier this year.

The latest version of iQOS is priced at 10,980 yen (US$99), while glo is priced at 8,000 yen. Japan Tobacco Inc’s vaping product “Ploom TECH”, which is set to be sold in Tokyo from June 29, costs 4,000 yen.

The former state monopoly, which commands 60% of Japan’s cigarette market, has been lagging in the new product category, but says it is aiming to grab the top share of the country’s vaping market in three years.

Japan Tobacco plans to spend 10 billion yen in marketing as it expands the sale of Ploom Tech to the rest of Japan in the first half of 2018, CEO Mitsuomi Koizumi told Reuters on Monday. – Reuters
Read more at http://www.thestar.com.my/business/business-news/2017/05/30/bat-to-expand-glo-smokeless-tobacco-sales-in-japan-from-july/#0kPxiDzxQM2ex1jq.99

Stopping production and marketing of tobacco can be the only way to uphold basic human rights

Action on Smoking and Health and Unfairtobacco agree with the Danish Institute of Human Rights (DIHR) that Philip Morris International (PMI) should cease “the production and marketing of tobacco.”

http://www.news-medical.net/news/20170529/Stopping-production-and-marketing-of-tobacco-can-be-the-only-way-to-uphold-basic-human-rights.aspx

After completing a collaboration with Philip Morris International (PMI) to develop a “human rights implementation plan,” the Danish Institute for Human Rights (DIHR) concluded that immediately stopping the sale and marketing of tobacco is the only way for tobacco companies to uphold basic human rights.

ASH and Unfairtobacco are fully aligned with the DIHR conclusion that tobacco production and marketing is deeply harmful and irreconcilable with the human right to health, meaning that PMI and other tobacco companies must stop selling harmful products immediately.

Tobacco giant Philip Morris International (PMI) approached the Danish Institute for Human Rights (DIHR), a quasistate body, last year to collaborate on a “human rights implementation plan” for PMI. The DIHR was given access to the corporation to assess PMI’s value chain. Following DIHR’s completion of their work, they concluded:

Tobacco is deeply harmful to human health, and there can be no doubt that the production and marketing of tobacco is irreconcilable with the human right to health. For the tobacco industry, the [United Nations Guiding Principles on Business and Human Rights] therefore require the cessation of the production and marketing of tobacco.

Allan Lerberg Jørgensen, Department Director, Human Rights and Development with the DIHR, stated they hoped their “input will enable PMI to better understand how the corporate responsibility to respect human rights applies to their business and take the necessary action.”

“ASH and our allies strongly agree with DIHR that the sale of cigarettes is irreconcilable with human rights. The necessary action that DIHR references is clear: if PMI is serious about human rights, it should stop producing, marketing and selling products that kill their consumers.”

Laurent Huber, Action on Smoking and Health (USA)

“As early as 1954, then PMI Vice President George Weissman said that ‘If we had any thought or knowledge that in any way we were selling a product harmful to consumers, we would stop business tomorrow’. The DIHR assessment is just the most recent reminder of their promise. We expect PMI to finally stop selling cigarettes immediately.”

Laura Graen, Unfairtobacco

For PMI to continue producing and marketing cigarettes directly conflicts with development and human rights objectives. Tobacco corporations not only sell a defective product that kills half of its consumers, but they also have a long history of pressuring governments to block and delay lifesaving regulations, thus costing the world millions of lives and billions of dollars every year.

Global Public Health Policies Against Tobacco Partnerships

One strategy the tobacco industry utilizes is the use of third party collaborations to interfere with tobacco control policy making, or to gain legitimacy as a “stakeholder,” and to white wash their reputation.

For this reason, the global tobacco treaty, the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) includes a process designed to protect public health policies from the interests of the tobacco industry, requiring that all public or semipublic institutions “should interact with the tobacco industry only when and to the extent strictly necessary to enable them to effectively regulate the tobacco industry and tobacco products.” With that in mind, the global public health community was united in asking DIHR to break their PMI relationship, in line with the Institute’s international human rights obligations. The DIHR responded promptly, ending the relationship before its originally published end date (August 2017).

Stopping the sale of tobacco products is also consistent with the United Nations

Sustainable Development Goals (SDGs), which call on countries to reduce the number of smokers through implementation of the tobacco treaty, the WHO FCTC.

Philip Morris has publicly welcomed the adoption of the Sustainable Development Goals, while their products are simultaneously recognized by the United Nations, Human Rights agencies, and the public health community as a barrier to development and human rights. Philip Morris states on its website, “How long will the world’s leading cigarette company be in the cigarette business?” The answer is clear: not a day longer.

SmokeFree Tasmania and Minister trade barbs

A war of words has erupted between the Health Minister Michael Ferguson and advocacy group, SmokeFree Tasmania, after it accused the government of bowing to the wishes of big tobacco companies.

http://www.examiner.com.au/story/4691300/government-slams-smoke-group-claims/

The stoush comes after Tasmania was named runner-up in the Australian Medical Association’s Dirty Ashtray Award – for governments that make the least effort to reduce smoking.

Responding to the second placing, Health Minister Michael Ferguson said the state would achieve better scores from the association as more policies aimed at reducing smoking rates were implemented.

But SmokeFree Tasmania north member Harley Stanton said the government had included suggestions from big tobacco companies to formulate its Healthy Tasmania Strategic Plan.

“Given that the Tasmanian government, in its healthy Tasmania policy, included advice from Imperial Tobacco it is not surprising that they have been nationally rebuked,” he said.

“This is both embarrassing internationally and bad conduct for any government.”

Fellow SmokeFree Tasmania adviser Kathryn Barnsley said the government needed to distance itself from tobacco companies.

She said the benefit of the government’s crusade on the illicit tobacco market benefited tobacco companies, like Imperial Tobacco.

“The tobacco industry wants the government to crack down on illicit tobacco, but the illicit market is not a health problem,” she said.

But Mr Ferguson slammed the comments as “complete and utter rubbish”.

“I also point out for the record that last year, the government proposed as part of the five-year plan raising the smoking age to 21, and SmokeFree Tasmania aggressively campaigned against it which is inexplicable,” he said.

Dr Barnsley said the government had also failed to provide more money for mass-media campaigns to reduce smoking rates.

Dr Stanton criticised the government’s health expenditure announced in last week’s budget.

“Prevention is better than a cure and reducing the number of people smoking will take pressure off our hospitals,” he said.

Big Tobacco is losing the fight to stop plain packaging of cigarettes

Dr Enrico Bonadio, a Senior Lecturer in the City Law School, says the tobacco industry’s bid to avoid plain packaging by relying on legal arguments around trade and intellectual property rights, is being systematically dismissed by courts around the world.

https://www.city.ac.uk/news/2017/may/big-tobacco-is-losing-the-fight-to-stop-plain-packaging-of-cigarettes

You may already have seen the tobacco packs currently sold in the UK: a dark, murky green colour with large graphic health-warning images and scary messages aimed at informing current and potential smokers about the devastating consequences of tobacco consumption. They have no colourful logos, with the brand name just displayed in small characters in a standard font.

These packs are now required by new regulations which entered into force in May 2016. There has been a one-year transitional period for the sell-through of old stock – and from May 20 2017 all tobacco products on sale in the UK must comply with the new rules.

The legislative move has been recommended to all countries by the World Health Organisation to reduce the attractiveness of smoking and eventually reduce consumption. Australia was the first country to introduce such strict packaging requirements in December 2012. France and, of course, the UK have since followed suit.

It follows significant research that shows these new standardised cigarette packs are much less appealing to consumers – and young people especially.
The industry’s legal defeats

No wonder tobacco companies have challenged the measure in the courts. They have argued that it is useless, too harsh – and is an infringement of their fundamental and intellectual property rights, especially trademarks. Yet, their claims are based on weak arguments and have been rejected by both the High Court of England and Wales and the Court of Appeal.

The tobacco industry has faced numerous courtroom defeats of late. Last year Uruguay won a landmark case against the Swiss giant Philip Morris International. The company had sued the Latin American state after it introduced two measures affecting tobacco packaging and trademarks. These were mandatory graphic health warnings covering 80% of cigarette packets (a measure very close to plain packaging) and the obligation for tobacco companies to adopt a single presentation for their brands, dropping for example the “gold” and “blue” descriptors, that could lead smokers to believe one variant was safer than another.

The fact that the courts sided with Uruguay would have been encouraging to other countries aiming to introduce controls on tobacco packaging. And even greater encouragement came recently from a World Trade Organisation ruling which deemed that the plain packaging requirements introduced by Australia as compliant with international trade and intellectual property rules – and are therefore a legitimate public health measure.

The decision has not been officially announced, but a confidential draft of the interim ruling was leaked to the media and the final decision is expected later this year. The Australian measure had been challenged at the WTO tribunal by Cuba, Dominican Republic, Indonesia and Honduras, countries whose economies strongly rely on the tobacco industry.

A domino effect

This is a blow to the industry. The short-term consequences of the WTO ruling – Imperial Tobacco’s shares fell more than 2% after the decision was leaked – reflects the longer-term danger that this ruling poses. It will likely convince other states to introduce plain packaging legislation without fear of violating international trade and intellectual property laws. It basically gives them a green light by removing the regulatory chilling effect that such legal action has produced on countries that wanted to follow Australia’s example.

After all, more and more countries seem interested in adopting standardised packaging. As well as France and the UK, Ireland and Norway will introduce packaging restrictions later in 2017, and Hungary in 2018. Many other states are debating similar measures, including New Zealand, Canada, Belgium, Slovenia, Belgium, Singapore and Thailand.

So, a legislative trend has started which aims to restrict the ability of tobacco manufacturers to make their products appealing to consumers by using eye-catching words, logos or ornamental features on the pack. And attempts by Big Tobacco to stop it by relying on legal arguments around trade and intellectual property rights are being systematically dismissed by courts around the world.

Ultimately, the industry needs to accept the fact that its ability to use fancy brands, especially on packaging, may be reduced by governments for public health reasons. Also that a company’s property rights are not absolute or untouchable. Not only does it not have enough legal basis – as has now been confirmed by several courts and tribunals – but it also disregards legitimate policies adopted by democratically elected governments.

Heat-Not-Burn Tobacco Cigarettes: Smoke by Any Other Name

Download (PDF, 146KB)

Appeals Court Deals Blow To Tobacco Companies

More than a decade after the Florida Supreme Court opened the floodgates for lawsuits against tobacco companies, an Atlanta-based appeals court this week rejected arguments that could have helped shield cigarette makers in legal battles about smoking-related illnesses and deaths.

http://wlrn.org/post/appeals-court-deals-blow-tobacco-companies-0

The full 11th U.S. Circuit Court of Appeals ruled against R.J. Reynolds Tobacco Co. and Philip Morris USA, Inc., which contended that federal law trumps certain claims. The appeals court also rejected the companies’ arguments of due-process violations.

The case largely stems from a 2006 Florida Supreme Court ruling that established findings about a series of issues including the dangers of smoking and misrepresentation by cigarette makers. The ruling helped spawn thousands of lawsuits in state and federal courts, with plaintiffs able to use the findings against tobacco companies — lawsuits that have become known as “Engle progeny” cases.

The appeals-court decision Thursday came in an Engle progeny case tried in federal court in Jacksonville. The case was filed by the family of Faye Graham, who died after smoking for 41 years and developing chronic obstructive pulmonary disease and lung cancer, according to a brief in the case.

A jury ruled against R.J. Reynolds and Philip Morris on issues of strict liability and negligence. It also found Graham partially at fault, with a judge ultimately deciding that R.J. Reynolds should pay $550,000 in damages and Philip Morris should pay $275,000.

In the appeal, the tobacco companies argued, in part, that federal laws regulate cigarettes and, as a result, should prevent claims of strict liability and negligence based on the Engle findings — a legal concept known as federal preemption.

“The strict-liability and negligence claims in this case do not rest on any alleged defect specific to the cigarettes smoked by Mrs. Graham. Instead … they rest on the inherent riskiness of all cigarettes,” attorneys for the tobacco companies argued in a 2014 brief. “The claims here thus seek to enforce a legal duty, grounded in Florida tort law, to refrain from selling ordinary cigarettes. Because such a duty squarely conflicts with federal law, the claims here are preempted.”

But Thursday’s majority ruling, written by appeals-court Judge William Pryor, rejected such contentions, writing that “federal tobacco laws do not preempt state tort claims based on the dangerousness of all the cigarettes manufactured by the tobacco companies.”

“Florida may employ its police power to regulate cigarette sales and to impose tort liability on cigarette manufacturers,” Pryor wrote in the 43-page opinion.

The majority also rejected to the tobacco companies’ arguments that due-process rights had been violated in using the Engle findings in the Graham case.

But appeals-court Judge Gerald Tjoflat wrote an encyclopedic 226-page dissent on the preemption and due-process issues. As an example, in addressing the preemption issue, he wrote that judges “cannot give effect to the Florida Supreme Court’s decisions in a manner that operates as a ban on the sale of cigarettes without elevating state law over federal law.”

“I merely conclude that, having surveyed both federal and state law, it is clear that Congress would have intended to preempt Graham’s strict-liability and negligence claims, rooted as they are in a broadly applicable state law set forth by the Florida Supreme Court that deems all cigarettes defective, unreasonably dangerous, and negligently produced,” Tjoflat wrote.